5.1 federal taxation - legal.thomsonreuters.com.au · (2) the governing rules (such as a...

5.1FEDERAL TAXATION

Federal taxation

IntroductionGeneral information ................................................................................. [5.1.101]Taxation of an organisation’s income ........................................................ [5.1.102]Self assessment...................................................................................... [5.1.103]Endorsement .......................................................................................... [5.1.104]Are federal tax concessions essential?...................................................... [5.1.105]Before applying for federal tax concessions............................................... [5.1.106]

Self assessment as income tax exemptIntroduction............................................................................................. [5.1.201]Community service organisations.............................................................. [5.1.202]Cultural organisations .............................................................................. [5.1.203]Education organisations ........................................................................... [5.1.204]Employment organisations ....................................................................... [5.1.205]Health organisations ................................................................................ [5.1.206]Religious institutions ................................................................................ [5.1.207]Resource development organisations........................................................ [5.1.208]

Scientific organisationsIntroduction............................................................................................. [5.1.209]Scientific institutions ................................................................................ [5.1.210]Scientific associations .............................................................................. [5.1.211]Scientific research funds .......................................................................... [5.1.212]Sporting organisations ............................................................................. [5.1.213]

Taxable income and mutualityOverview ................................................................................................ [5.1.301]

Endorsement for income tax exemptionIntroduction............................................................................................. [5.1.401]Eligibility and application for endorsement as income tax exempt ................ [5.1.402]Charitable purpose .................................................................................. [5.1.403]Other income tax exempt bodies .............................................................. [5.1.404]Unsuccessful endorsement applications and loss of endorsement ............... [5.1.405]Review and appeal of decisions ............................................................... [5.1.406]Review and revocation of endorsement..................................................... [5.1.407]

Special conditions for endorsementNot-for-profit ........................................................................................... [5.1.501]Australian Business Number .................................................................... [5.1.502]“In Australia” test for income tax exemption ............................................... [5.1.503]Disregarded amounts .............................................................................. [5.1.504]In Australia test for DGR endorsement ...................................................... [5.1.505]Institution................................................................................................ [5.1.506]

Deductible gift recipients – an overview

Update: 0501 - 51© 2013 THOMSON REUTERS

Introduction............................................................................................. [5.1.601]Eligibility and application for endorsement as a DGR ................................. [5.1.602]Categories of DGR .................................................................................. [5.1.603]Unsuccessful DGR endorsement applications and loss of endorsement....... [5.1.604]Pursuing multiple purposes ...................................................................... [5.1.605]Review and appeal of decisions ............................................................... [5.1.606]Special listing.......................................................................................... [5.1.607]Review and revocation of DGR endorsement ............................................ [5.1.608]

DGR endorsement for whole of organisationPublic benevolent institutions ................................................................... [5.1.701]Health promotion charities........................................................................ [5.1.702]Charitable services institution ................................................................... [5.1.703]

DGR endorsement for the operation of a fund, authority or institution

School/college building fundsIntroduction............................................................................................. [5.1.801]Applying for endorsement for a school building fund................................... [5.1.802]Ways to establish a school building fund ................................................... [5.1.803]Governing rules....................................................................................... [5.1.804]Qualifying bodies..................................................................................... [5.1.805]What can a school building fund pay for? General information .................... [5.1.806]What can a school building fund pay for? More detail................................. [5.1.807]Meaning of established and maintained solely ........................................... [5.1.808]What is a school or college? .................................................................... [5.1.809]What is a building?.................................................................................. [5.1.810]What is use as a school? ......................................................................... [5.1.811]Other use that is integral to use as a school.............................................. [5.1.812]Other use that is minor or occasional........................................................ [5.1.813]Multi-purpose buildings and complexes ..................................................... [5.1.814]Multi-purpose fundraising appeals............................................................. [5.1.815]Fund administration ................................................................................. [5.1.816]Ancillary funds ........................................................................................ [5.1.817]

Scholarship fundsIntroduction............................................................................................. [5.1.830]Applying for endorsement for a scholarship fund........................................ [5.1.831]Ways to establish a scholarship fund ........................................................ [5.1.832]Charitable purposes ................................................................................ [5.1.833]Operating the fund .................................................................................. [5.1.834]Scholarships, bursaries and prizes............................................................ [5.1.835]Australian citizens and permanent residents .............................................. [5.1.836]Openness Test ........................................................................................ [5.1.837]Promoting recipients’ education ................................................................ [5.1.838]Approved Australian courses .................................................................... [5.1.839]Overseas................................................................................................ [5.1.840]Merit or equity......................................................................................... [5.1.841]Curriculum related instruction ................................................................... [5.1.842]Excursions and field trips ......................................................................... [5.1.843]Predominantly recreational ....................................................................... [5.1.844]Excursions and field trips – examples ....................................................... [5.1.845]

Overseas aid fundsIntroduction............................................................................................. [5.1.850]Endorsement process for overseas aid funds ............................................ [5.1.851]Ways to establish an overseas aid fund .................................................... [5.1.852]Specific public fund requirements ............................................................. [5.1.853]

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Not-For-Profit Best Practice Manual501 - 52© 2013 THOMSON REUTERS

Use of funds ........................................................................................... [5.1.854]Receipts ................................................................................................. [5.1.855]Approved countries ................................................................................. [5.1.856]Approved organisation status – an overview .............................................. [5.1.857]Approved organisation status – further detail ............................................. [5.1.858]Fund names ........................................................................................... [5.1.859]

Harm prevention charitiesIntroduction............................................................................................. [5.1.870]Applying for endorsement as a harm prevention charity.............................. [5.1.871]Ways to establish a harm prevention fund ................................................. [5.1.872]What is a harm prevention charity?........................................................... [5.1.873]Fund names ........................................................................................... [5.1.874]Operating the public fund on the Register of Harm Prevention Charities

(including the public fund management committee)................................ [5.1.875]Provision of statistical and other account data ........................................... [5.1.876]Ministerial rules ....................................................................................... [5.1.877]Receipts ................................................................................................. [5.1.878]Removal from the Harm Prevention Register ............................................. [5.1.879]

Environmental organisationsIntroduction............................................................................................. [5.1.890]Applying for entry on the REO and for DGR endorsement .......................... [5.1.891]Ways to establish an environmental organisation ....................................... [5.1.892]Specific requirements, including public fund requirements for environmental

organisations and funds ...................................................................... [5.1.893]What is meant by the natural environment?............................................... [5.1.894]Name of fund.......................................................................................... [5.1.895]Operating the public fund on the REO (including the public fund

management committee) ..................................................................... [5.1.896]Provision of statistical and other account data ........................................... [5.1.897]Ministerial rules ....................................................................................... [5.1.898]Receipts ................................................................................................. [5.1.899]Removal from the Register of Environmental Organisations ........................ [5.1.900]

Cultural organisationsCultural organisations .............................................................................. [5.1.910]Applying for entry onto the ROCO and for DGR endorsement ..................... [5.1.911]Ways to establish a cultural organisation ................................................... [5.1.912]Specific requirements .............................................................................. [5.1.913]Fund names ........................................................................................... [5.1.914]Operating the public fund on the ROCO.................................................... [5.1.915]Provision of statistical information ............................................................. [5.1.916]Notification of changes ............................................................................ [5.1.917]Receipts ................................................................................................. [5.1.918]Review and removal from the Register of Cultural Organisations................. [5.1.919]

Ancillary fundsGeneral information ................................................................................. [5.1.951]Private ancillary funds.............................................................................. [5.1.952]Public ancillary funds............................................................................... [5.1.953]

Public fundsIntroduction........................................................................................... [5.1.1001]Overview of public fund requirements ..................................................... [5.1.1002]Objects of the fund ................................................................................ [5.1.1003]Gifts to the fund must be kept separate................................................... [5.1.1004]Receipts must be issued in the name of the fund..................................... [5.1.1005]

FEDERAL TAXATION


Public must be invited to contribute to the fund and must in fact contribute .................[5.1.1006]

Fund must operate on a not-for-profit basis ............................................. [5.1.1007]Operated in Australia ............................................................................. [5.1.1008]Public responsibility requirement............................................................. [5.1.1009]Winding up ........................................................................................... [5.1.1010]ATO is to be notified of any changes to the fund’s founding documents ..... [5.1.1011]

Gift fundsOverview .............................................................................................. [5.1.1101]

Deductible gifts and deductible contributionsIntroduction........................................................................................... [5.1.1201]Deductible gifts ..................................................................................... [5.1.1202]Deductible contributions ......................................................................... [5.1.1203]

Goods and services tax (GST), Australian Business Number (ABN) andPay-as-you-go (PAYG)

Introduction........................................................................................... [5.1.1301]Obtaining an ABN ................................................................................. [5.1.1302]GST ..................................................................................................... [5.1.1303]Pros and cons of registering for GST ...................................................... [5.1.1304]Pay-as-you-go withholding tax system – PAYG ........................................ [5.1.1305]

Fringe benefits taxIntroduction........................................................................................... [5.1.1401]What is a fringe benefit? ........................................................................ [5.1.1402]FBT exemption and FBT rebate.............................................................. [5.1.1403]

Appendix 1 – Application for endorsement as a tax concessioncharity or income tax exempt fund

Application form .................................................................................... [5.1.3010]Appendix 2 – Table of gifts or contributions that you can deduct

Income Tax Assessment Act 1997 s 30-15 .............................................. [5.1.3020]Appendix 3 – Various exempt entities

Income Tax Assessment Act 1997 Subdivision 50A .................................. [5.1.3030]Appendix 4 – Glossary

Glossary of terms in this chapter ............................................................ [5.1.3040]

[The next text page is 501-1051]

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Essential resources

4 Division 30 of the ITAA97

4 ATO publication GiftPack: Guide for Deductible Gift Recipients and Donors (NAT3132) (GiftPack)

[5.1.604] Unsuccessful DGR endorsement applications and loss ofendorsement

Four of the main reasons why organisations fail to obtain DGR endorsement are:

(1) the application form and any required schedule to the form are not completed or notcompleted properly;

(2) the governing rules (such as a constitution, trust deed or stand-alone public fund rules)do not include all the required provisions;

(3) the organisation’s purposes and activities do not properly fit the criteria of DGRendorsement that is being sought or else they have not been properly articulated in thefounding documents, in the application for endorsement, within promotional materials oron its website; and

(4) an organisation’s objects and activities are broad and cover two or more DGR categories,often meaning that it is ineligible for DGR endorsement at all. This situation arisesbecause many of the DGR categories require the organisation to have a “sole”,“exclusive” or “primary purpose” and it is not possible to have more than one exclusive,sole or primary purpose.

It is natural for an organisation that has been refused DGR endorsement to look at otherorganisations that have been successfully endorsed and to draw comparisons. In doing so, it issometimes very difficult to work out why this might be the case. For instance, it is not unheardof for an organisation that is based in one state to be granted endorsement while its sisterorganisation established in another state is not, despite the fact that the applicant organisationhas identical purposes and a similar structure.

Reasons why one organisation may be granted DGR endorsement while another, apparentlysimilar, organisation is not, include:

• the endorsed organisation was endorsed some time ago and may, over time, havechanged such that it is no longer entitled to be endorsed and this fact has not beenidentified through either self assessment or ATO audit;

• there has been a change to the relevant endorsement laws or ATO policies and again, aself review or ATO audit has not revealed this fact;

• the endorsed organisation obtained its DGR endorsement by being specifically listed inthe ITAA97 because it too was not eligible for endorsement under a pre-existingcategory (see [5.1.607] for more on special listing);

• the endorsed organisation, having been refused endorsement in the first instance,appealed the decision and was eventually successful (see [5.1.606] for more on thereview and appeal of decisions);

• the actual facts of the matter, if known, would reveal that the two organisations are not assimilar as may be apparent on the surface; and

• the endorsed organisation was able to prepare a more compelling argument or providemore convincing material in support of its application for endorsement.

The most common reasons for loss of endorsement include:

FEDERAL TAXATIONDEDUCTIBLE GIFT RECIPIENTS – AN OVERVIEW[5.1.604]


• the organisation was endorsed some time ago and has, over time, changed its purposesand activities and as a result it no longer satisfies the endorsement criteria;

• there has been a change to the relevant endorsement laws or ATO policies and as a resultthe organisation no longer satisfies the endorsement criteria; and

• where the organisation acts as a conduit by doing nothing more than transferringdeductible gifts it receives through to one or more organisations that do not have DGRendorsement.

[5.1.605] Pursuing multiple purposes

While the current DGR endorsement requirements, for the most part, run contrary to theprovision of a holistic approach, for service delivery to a particular disadvantaged communityfor instance, it is what it is and will remain so until the law is amended to remedy thissituation.

Organisations that wish to obtain DGR endorsement for multiple purposes falling undermultiple DGR categories can create a structure containing multiple entities and/or funds, eachof which has its own specific purposes and activities, and can then seek DGR status for eachcomponent. However, creating and implementing such a structure can be a lengthy,resource-intensive and expensive exercise and even then DGR endorsement is not guaranteedfor all or any component of the organisation. Structures of this nature often run into difficultiesfrom both administration and DGR compliance perspectives.

[5.1.606] Review and appeal of decisions

Alert

At the time of writing it is unclear as to what role the ACNC will have in handlingapplications for DGR endorsement and whether it will act as the interface betweenthe applicant and the ATO. As such, the below section is based on the assumption thatthe applicant and the ATO will interact with each other directly and not through theACNC.

When refusing an organisation’s application for DGR endorsement, the ATO will provide anexplanation for its decision. The organisation then has a number of review options:

Informal: An organisation can simply ask the person at the ATO responsible for assessing theapplication to reconsider the decision. The ATO will then try to resolve the issues quickly andinformally.

Formal: An organisation can also take a more formal approach, either at the time theapplication is refused or after the informal approach described above has been exhausted. Toinitiate the formal review process, an organisation needs to lodge a written objection with theATO within 60 days of the date of the notice of decision. The written objection should beaddressed to the ATO and explain the grounds for the objection. The ATO will provide theorganisation with its decision in response to the objection and reasons for that decision inwriting.

Formal review by deemed refusal: If an organisation forms the view that the applicationassessment is taking too long, it can give the ATO written notice of its wish to have theapplication treated as if it had been refused and thereby trigger formal review rights.

Note however that the earliest an organisation can trigger a formal review in this way is thelater of:

• the end of the 60th day after the initial application for endorsement was made; and

TAXATIONFEDERAL TAXATION [5.1.604]


• the end of the 28th day after the last time information was given to the ATO in aresponse to its request.

Subject to the above time periods, an application will be deemed to be refused on the day thewritten notice is given.

Review by tribunal or court: If, having been formally reviewed by the ATO, the applicationfor endorsement is still refused, the organisation may:

• seek a review of the decision by the Administrative Appeals Tribunal; or

• appeal the decision to the Federal Court of Australia.

The ATO will, when notifying an organisation of its refusal, provide information explaining thesteps it needs to follow to exercise its review and appeal rights.

[5.1.607] Special listing

If an organisation is not eligible for endorsement as a DGR under one of the pre-existingcategories, it can pursue special listing (also referred to as specific listing) through submissionsto the Commonwealth Treasury. Special listing requires the ITAA97 to be amended tospecifically list the organisation. This is often more of a political, than a legal, process andcommonly takes in excess of 12 to 18 months. Even then, success is far from guaranteed.

The support of the Commonwealth Government minister responsible, through his or herrespective portfolio, for the type of activities and purposes of the organisation seeking listing isalmost always required for a successful special listing application. For example, anenvironmental organisation that has explored and exhausted all other DGR endorsementoptions and believes that, despite there being no DGR category relevant to its purposes, shouldbe eligible for endorsement, is likely to need the support of the Commonwealth Governmentminister responsible for the environment. For more on specific listing, including links to listsof organisations currently listed in the income tax law go to the ATO website atwww.ato.gov.au/nonprofit/content/31654.htm.

[5.1.608] Review and revocation of DGR endorsement

Alert

At the time of writing it is unclear as to what role the ACNC will have in reviewingorganisations with respect to DGR endorsement. That is, will it be responsible forreviewing, will it be the interface between the organisation and the ATO or will it sitoutside of the process altogether? As such, the below section is based on theassumption that the applicant and the ATO will interact with each other directly andnot through the ACNC.

The ATO reviews endorsed charities to see if they are still eligible for endorsement as part ofits general administration of taxation laws. As part of the review, the ATO will almost certainlyrequest information and documents that are relevant to the organisations’ entitlement toendorsement. For example, financial accounts, bank account statements, annual reports, granteligibility criteria, project documentation and funding agreements. At least 28 days will begiven for the organisation to provide the requested information and materials.

The ATO can revoke an organisation’s DGR endorsement if the organisation:

• is no longer entitled to be endorsed;

• has not provided the ATO with the requested information or documents within thespecified time after a request; or

FEDERAL TAXATIONDEDUCTIBLE GIFT RECIPIENTS – AN OVERVIEW[5.1.608]


• has failed to comply with the DGR receipting requirements (see [5.1.1005]).

Notification of revocation of endorsement will be given in writing. The revocation will haveeffect from the date specified in the notice which may be retrospective.

Organisations that have had their endorsement revoked can lodge an objection against therevocation. The objection must be in writing and should clearly set out the reasons for theobjection.

It is not uncommon for an organisation’s focus, governing body, employees, structure,activities and even purpose to change over time. As such, the ATO recommends that eachendorsed organisation carry out a yearly self-review to assess whether it is still entitled to beendorsed. A review is also recommended when there is a major change in the organisation’sstructure or operations.

If the self-review process reveals that the organisation is no longer entitled to endorsement, itmust notify the ATO. Failure to do so may result in prosecution.

The ATO provides a worksheet to assist organisations with the self-assessment process whichcan be downloaded from the ATO website.

DGR endorsement for whole of organisation

[5.1.701] Public benevolent institutions

A public benevolent institution (PBI) is a non-profit institution established and run for thedirect relief of such poverty, sickness, suffering, distress, misfortune, disability as arousescompassion in the community.

It is worth noting here that while PBI is a category of DGR endorsement, it is also a specifictype of institution for the purposes of fringe benefits tax concessions (see [5.1.1401] –[5.1.1403]) and is sufficient to demonstrate that it is a charitable institution for the purposes ofincome tax exemption as it falls under the head of charity relating to the relief of poverty. Inother words, an organisation that can demonstrate that it is a PBI will often meet the eligibilitycriteria for endorsement as both a charitable institution and a DGR. As such, organisations willcommonly apply for both these endorsements at the same time. The assessment of whether anorganisation is a PBI is, up until 10 December 2012, the responsibility of the ATO after whichit will become the responsibility of the soon to be established Australian Charities andNot-for-profit Commission. However, please note that being registered as a PBI by the ACNCwill not lead to automatic endorsement as a DGR under this category. The organisation willstill need to meet the DGR endorsement criteria administered by the ATO.

The elements of a PBI, each of which must be satisfied when applying for endorsement, can beexpressed as follows:

• it is operated for the primary purpose of meeting needs requiring benevolent relief(benevolent needs);

• it relieves the benevolent needs by directly providing services to people in need;

• it is carried on for the public benefit;

• it is a not-for-profit institution; and

• it meets the in Australia test.

Organisations that may be PBIs include:

• hostels and soup kitchens for the homeless;



• disability support services;

• hospitals and medical clinics;

• domestic violence support services; and

• refugee relief centres.

Applying for endorsement as a PBI

For an organisation that is a PBI to receive income tax and FBT exemption, it must apply forendorsement using the TCC Application Form. Then, for DGR endorsement, it must completeand lodge a separate DGR Application Form together with the PBI Schedule (see below).

All these forms, together with any accompanying submissions, can be lodged at the same time.While some applicants will neatly meet the PBI criteria and may obtain endorsement based onthe forms and required documents alone, it is often advisable to provide additionalsubmissions.

See [5.1.602] for more detail on applying for DGR endorsement.

Alert

The Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill2012, if passed into law, will amend the ITAA97 to introduce an explicit in AustraliaTest for DGR endorsement and will add additional conditions.

For more on the in Australia test for DGR purposes, see [5.1.505].

The ATO interprets the in Australia requirement for DGR endorsement under the category ofPBI to mean not only that the organisation must be physically located in Australia but also thatit must perform its activities and pursue its purposes in Australia (PBI DGR in Australia Test).The ATO’s GiftPack publication provides the following example:

A public benevolent institution for the homeless is set up in Australia. It provides servicesin Australia and Thailand.

ATO assessment: It is not “in Australia”. It cannot be endorsed as a DGR.

While the ATO acknowledges that certain activities are exempt from the in Australiarequirement, such activities must be merely ancillary to the Australian operations or minor inextent and importance. Paragraph 130 of Taxation Ruling TR 2003/5 summarises the ATO’sposition as follows:

130. We accept that where a public benevolent institution conducts an activity outsideAustralia that is merely incidental to providing relief in Australia, or is insignificant, it willnot disqualify the institution from endorsement. For example, if a public benevolentinstitution provides medical assistance to children in Australia with a particular disabilitybut, to a minor extent, it also brings children from other countries to receive treatment inAustralia, it still meets this condition for endorsement.

The ATO’s GiftPack publication provides the following example:

A public benevolent institution is set up in Australia. Part of the treatment it providesinvolves travel to Canada.

ATO assessment: The institution will be “in Australia” if the Canadian travel is merelyincidental to its treatment of Australians.

PBI activities test

• A PBI is a non-profit institution organised for the direct relief of such poverty, sickness,suffering, distress, misfortune, disability, destitution, or helplessness as arousescompassion in the community: Taxation Ruling TR 2003/5 at para 7. One of the key

FEDERAL TAXATIONDGR ENDORSEMENT FOR WHOLE OF ORGANISATION[5.1.701]


components of this definition is the concept of “direct”. That is, a PBI is an organisationthat provides its aid and services directly to people in need of benevolent relief: TaxationRuling TR 2003/5 at paras 17 and 61.

• While the organisation must be at least predominantly for the direct relief of poverty,sickness, destitution or helplessness etc, there is some scope for a PBI to do somenon-PBI activities so long as such activities are incidental to the public benevolence or ofminor extent and importance: Taxation Ruling TR 2003/5 at para 22.

• Activities that are of an educational or training nature receive specific mention. TaxationRuling TR 2003/5 states at para 34:

34. Needs that are to be met by education or training will not normally be such as toarouse compassion. This includes vocational training and apprenticeship schemes.However, there will be circumstances where education or training may be among theservices provided to alleviate the effects of poverty or misfortune. For example someorganisations will be public benevolent institutions where they exist to assistlong-term unemployed young people cope with the problems caused by not beingable to obtain employment. Such organisations encourage them to take oncommunity service and casual employment and also offer a range of activities andtraining aimed at developing employment and related skills. In contrast, a training orskills organisation that does not specifically target its assistance for those sufferingpoverty or misfortune (eg through its selection processes, the types of courses itoffers, the types of special assistance it provides, the targets of its advertising andpromotion, and so on) would be unlikely to be a public benevolent institution.

Essential resources

4 Item 4.1.1 of the table at ss 30-45 and 30-125 of the ITAA97


4 Taxation Ruling TR 2003/5 Income tax and fringe benefits tax: public benevolentinstitutions

4 ATO Application Form “Application for endorsement as a tax concession charity orincome tax exempt fund (NAT 10651)” (TCC Application Form)

4 ATO Application Form “Application for endorsement as a deductible gift recipient (NAT2948)” (DGR Application Form)

4 The schedule to the DGR Application Form entitled “Public benevolent institution –schedule for deductible gift recipient applicants JS 18481” (PBI Schedule)

[5.1.702] Health promotion charities

The provisions relating to health promotion charities were introduced into the tax law in 2001by the Taxation Laws Amendment Act (No 2) 2001. These provisions are designed to provideorganisations qualifying as health promotion charities with the same concessions as areavailable to PBIs.

To qualify for the tax concessions available to a health promotion charity, the organisationmust:

• be a charitable institution (see [5.1.403] for more on charitable purpose, [5.1.501] formore on not-for-profit and [5.1.506] for more on “institution”); and

• have as its principle activity the promotion of the prevention or the control of diseases inhuman beings (see below).



Organisations that promote the prevention or control of disease in animals or plants cannotqualify as a health promotion charity, as health promotion charities must be about disease inhumans.

Applying for endorsement as a health promotion charity

For an organisation that is a health promotion charity, to receive income tax and FBTexemption, it must apply for endorsement using the TCC Application Form. Then, for DGRendorsement, it must complete and lodge a separate DGR Application Form. There is noadditional DGR Application Form schedule to complete.

These forms, together with any accompanying submissions, can be lodged at the same time.While some applicants will neatly meet the health promotion charity criteria and may obtainendorsement based on the forms and the required documents alone, it is often advisable toprovide additional submissions.

See [5.1.602] for more detail on applying for DGR endorsement.

Prevention or control as principal activity

The principal activity of the organisation need not be both the prevention and the control ofdisease in humans (either prevention or control is sufficient), though both is also fine. What isimportant is that this activity is the main activity of the organisation; that is, it outweighs theorganisation’s other activities.

Paragraph 24 of Taxation Ruling TR 2004/8 provides, in summary, that

• the provisions of the ITAA97 dealing with health promotion charities are also directed tocharitable institutions that promote the control of disease;

• control, like prevention, extends to activities that are directed to limiting the incidenceand spread of disease;

• control can also include alleviating suffering and distress associated with the diseasewithout necessarily being directed to the prevention of the disease itself. Although notethat such activities could be more akin to those performed by a PBI (see [5.1.701] inrelation to PBIs and see further below for the difference between a health promotioncharity and a PBI); and

• control of disease extends to the management and treatment of disease and can includeactivities which control the spread and incidence of disease within and between peopleand activities which control the severity of the disease.

What is meant by “disease”?

The term “disease” is defined at s 34.20(3) of the ITAA97 (the same definition is used in theFringe Benefits Tax Assessment Act 1986: see s 136(1)). The definition from the ITAA97 is asfollows:

Disease includes any mental or physical ailment, disorder, defect or morbid condition,whether of sudden onset or gradual development and whether of genetic or other origin.

See also Taxation Ruling TR 2004/8 para 8 (definition of disease).

Paragraph 5.12 of the Explanatory Memorandum to the Taxation Laws Amendment Bill (No 2)2001 provides that health promotion charities are medical or health organisations that“typically focus on particular types of ailments or health issues, for example, asthma, cancer,acquired immune deficiency syndrome (AIDS), arthritis, heart conditions, brain conditions,paraplegia and kidney conditions”.

Also see para 20 of Taxation Ruling TR 2004/8 which presents further examples of dementia,autism, cerebral palsy, mental illness and multiple sclerosis. The same paragraph goes on to



state that:

Recognition by medical authorities will no doubt assist in concluding whether newlyidentified conditions fall within the term.

So, what types of disease and what types of conditions may be covered by the term “disease”may very well change over time.

Paragraph 23 of Taxation Ruling TR 2004/8 states that injury is not disease, drawing upon thefact that “injury” and “disease” are dealt with separately under s 34.20 of the ITAA97.However, this is not to say that disease cannot result from injury. Paragraph 23 states that“disease can include the adverse health consequences that follow from such things as burns,lacerations and broken bones. However, the burns, lacerations and broken bones themselvesare not diseases”.

So, with the above in mind, organisations focusing on the reduction of injury (eg accidentprevention bodies) are not contemplated by Div 30 of the ITAA97 and are not considered ashealth promotion charities.

However, although stroke resulting from progressive heart disease or the rupture of ananeurysm has been found to constitute “injuries” for the purposes of workers compensationlegislation, even a judicial finding that such an event is an injury for workers compensationpurposes does not necessarily mean that the underlying cause is not a disease for the purposesof the taxation health promotion legislation (Taxation Ruling TR 2004/8 at para 23).

What activities are health promotion activities?

The types of activities performed by health promotion charities are, due to the broad definitionof disease and the nature of health and medical organisations, themselves broad. Paragraph 28of Taxation Ruling TR 2004/8 provides some examples as follows:

• providing information about prevention or control to sufferers of disease, healthprofessionals, carers and to the public;

• researching how to detect, prevent or treat diseases;

• developing or providing relevant aids and equipment;

• evaluating health programs and processes to prevent or control disease;

• training carers and health professionals in ways of controlling diseases;

• treating and caring for persons suffering from diseases;

• developing and implementing co-operative and cross-disciplinary approaches totreatment and prevention of diseases in human beings; and

• coordinating health promotion activities of charitable institutions that principallypromote the prevention or the control of diseases.

Refer to paras 29 to 36 of Taxation Ruling TR 2004/8 for examples of organisations that arehealth promotion charities and paras 37 to 43 of Taxation Ruling TR 2004/8 for examples ofwhat are not health promotion charities.

Difference between a PBI and a health promotion charity

At times there can be a fine line between whether an organisation is best described as a publicbenevolent institution (PBI) (see [5.1.701]) or as a health promotion charity. This is becausecertain activities such as the provision of medical services to the needy or the suffering,engaging in research and engaging in the promotion and control of certain diseases could bereadily and legitimately performed by either type of organisation.

So, what is the difference? The distinction is to be found in the focus of the organisation.



Basically, to be a PBI, an organisation’s primary purpose must be aimed at relieving thesuffering caused by a disease. While on the other hand, if an organisation’s primary purpose ismore focused on the prevention or control of disease, then it is more likely to be a healthpromotion charity.

However, it should be remembered that a PBI is permitted to conduct some activities which areassociated with a health promotion charity and that a health promotion charity can conductactivities that are associated with a PBI so long as in each case the relevant activities are minorin scale and are ancillary to the organisation’s main purpose.

Essential resources



4 Taxation Ruling TR 2004/8 Income tax and fringe benefits tax: health promotioncharities

4 Taxation Laws Amendment Act (No 2) 2001 and the accompanying ExplanatoryMemorandum

4 Treasurer’s Press Release No 55 of 22 June 2000

4 ATO Application Form “Application for endorsement as a tax concession charity orincome tax exempt fund (NAT 10651)” (TCC Application Form)


[5.1.703] Charitable services institution

The concept of a charitable services institution (CSI) was introduced into tax law in 2006. ACSI is a charitable institution that would be a public benevolent institution (PBI) but for thefact that it:

• also promotes the prevention or the control of diseases in human beings (but not as aprincipal activity) (see [5.1.702] for more on health promotion charities); and/or

• also promotes the prevention or the control of behaviour that is harmful or abusive tohuman beings (but not as a principal activity) (see [5.1.870] for more on harm preventioncharities).

Basically, a CSI is a charitable institution that cannot be endorsed as a PBI because it alsoundertakes some health promotion and/or harm prevention activities.

Applying for endorsement as a CSI

For a CSI to receive income tax and FBT exemption it must:

• apply for endorsement using the TCC Application Form; then

• for DGR endorsement, it must complete and lodge a separate DGR Application Formtogether with a completed CSI Schedule (see below).

TIP +

These forms, together with any accompanying submissions, can be lodged at the same time.

While some applicants will neatly meet the CSI criteria and may obtain endorsement based

on the forms and the required documents alone, it is often advisable to provide additional



submissions. See [5.1.602] for more detail on applying for DGR endorsement.

A CSI must undertake health promotion activities and/or harm prevention activities but not asits principal activity.

• “Health promotion activities” are activities that promote the prevention or the control ofdiseases in human beings. If an organisation’s principal activity is health promotion, itmay qualify for DGR endorsement under the health promotion charity category (see[5.1.702]).

• “Harm prevention activities” are activities that promote the prevention or control ofbehaviour that is harmful or abusive to human beings. If an organisation’s principalactivity is harm prevention, it may qualify for DGR endorsement under the harmprevention charity category (see [5.1.870]).

To establish whether an organisation meets the requirements for endorsement as a CSI, ignoreany of the organisation’s health promotion and harm prevention activities. Then, consideringthe organisation’s remaining purpose and activities, it must now qualify for endorsement as aPBI.

Examples from the GiftPack

Eligible as CSI

Caring Charities is a charitable institution whose objects are relieving poverty andimproving health in relation to a particular disease. It carries out its objects byproviding hostel accommodation for the homeless and by providing healthinformation about the disease to health professionals, carers and the public. Theproviding of health information accounts for 45% of its activities. It also preparesand publishes research papers about poverty, but these activities are minor in extentand importance. Caring Charities would qualify as a public benevolent institutionexcept that it provides health information about the disease. Because this is not itsprincipal activity, Caring Charities is eligible for endorsement under the categoryof CSI.

Ineligible as CSI

Nalla Care is a charitable institution whose objects and activities are operating ahomeless shelter, running community health activities and operating a kindergarten.Running the community health program amounts to 20% of Nalla Care’s activities.Nalla Care is equally engaged in the other two operations – the homeless shelterand the kindergarten.

Nalla Care’s health promotion activities are not its principal activity and itshomeless shelter is consistent with being a PBI. However, its kindergarten is notproviding direct benevolent relief and is not minor in extent and importance. Thismeans Nalla Care would not be a PBI once the health promotion activities weredisregarded. Therefore, Nalla Care is not a CSI.

Essential resources





4 ATO Application Form entitled “Application for endorsement as a tax concession charityor income tax exempt fund” (NAT 10651) (TCC Application Form)

4 ATO Application Form entitled “Application for endorsement as a deductible giftrecipient” (NAT 2948) (DGR Application Form)

4 “Charitable services institution – schedule for deductible gift recipient applicants (NAT15608)” (CSI Schedule)

DGR endorsement for the operation of a fund, authority or institution

School/college building funds

[5.1.801] Introduction

There is no category of DGR endorsement that enables a school or college to be endorsed as awhole. However, there are a number of specific funds relevant to schools and colleges that canbe established. One such fund is a school building fund.

While schools and colleges, or the entities that operate them, most commonly establish schoolbuilding funds, other entities are also permitted to establish a school building fund so long asall the requirements are met. Outside of schools and colleges themselves, it is organisationsthat have a connection with a school that are most likely to establish and maintain a schoolbuilding fund (eg school foundations and parents associations).

In general terms, a school building fund is used to provide money for the acquisition,construction or maintenance of a building that is used (or to be used) as a school building by aschool.

More specifically, the DGR category of school building fund covers funds with the followingcharacteristics:

• the fund is a public fund (see [5.1.1001] – [5.1.1011]);

• the public fund is established and maintained solely for providing money for theacquisition, construction or maintenance of a building;

• the building is used, or to be used, as a school or college; and

• the building is used as a school by a government, a public authority or an NFP.

The requirements of and restrictions upon a school building fund are rather extensive and,without the correct knowledge and processes in place, can lead to difficulties. As a result, itdoes not take too much at all for things to get really complicated. For instance, it is notuncommon for one or more, or even all, of the following factors to also be present:

• a single school operates several school building funds itself;

• one or more organisations separate from the school, such as a related school foundation,operate a school building fund for the benefit of that school in addition to a fund that theschool itself operates;

• there are multiple school building funds with one or more of them being operated undera trust deed and others under a set of stand-alone rules;

• there are multiple school building funds, one or more of them being endorsed as a DGRin its own right and with particular entities being endorsed for the operation of others;

• there are multiple school building funds, all of which have similar names;

FEDERAL TAXATIONDGR ENDORSEMENT FOR THE OPERATION OF A FUND, AUTHORITY OR INSTITUTION[5.1.801]


• there are multiple school building funds, all of which have similar, but varying, statedpurposes;

• over time the reason for the establishment of one or more school building funds havebecome irrelevant or have been forgotten;

• trust deeds and other founding documents have been lost;

• the school principal and other stakeholders have different ideas about how schoolbuilding fund monies should be applied; and

• the school also operates other funds such as scholarship funds, public library funds andpublic ancillary funds.

On 5 December 2011, the ATO released Draft Taxation Ruling TR 2011/D5 – Income tax:school or college building funds for public comment. The new draft ruling will replaceTaxation Ruling TR 96/8 of the same name.

The main change between draft ruling TR 2011/D5 and TR 96/8 is that the “more than 50%rule” provided as an administrative rule of thumb has been removed. This rule of thumb hasbeen removed because the ATO no longer considers it correct in law.

Draft Taxation Ruling TR 2011/D5 also contains expanded discussion and more practicalexamples on:

• what is a building, what is a school and what is use of a building as a school; and

• the use of funds held by a school building fund to cover reasonable expenditure incurredin administering the fund.

Essential resources

4 Item 2.1.10 of the table at section 30-25 of the ITAA97


4 Draft Taxation Ruling TR 2011/D5 Income tax: school or college building funds which isto replace Taxation Ruling TR 96/8 of the same name

4 ATO Fact Sheet “Fact sheet on school building funds” (NAT 5393) (School BuildingFact Sheet)

4 ATO Taxation Ruling TR 95/27 Income tax: public funds


[5.1.802] Applying for endorsement for a school building fund

To apply for DGR endorsement as, or for the operation of, a school building fund, theapplicant entity must have an ABN and must lodge with the ATO:

• a completed DGR Application Form; and

• a copy of the governing rules for the school building fund. Such governing rules may becontained within a constitution, a trust deed or be stand-alone.

[5.1.803] Ways to establish a school building fund

School building funds are commonly established in one of two ways:

(1) as a trust, with the trust deed setting out the governing rules for the fund; or

(2) under a set of stand-alone governing rules adopted by the governing body of theapplicant entity.



It is also possible, though less common, for the rules relating to a school building fund to beincorporated into the constitution of the applicant entity.

If a school building fund is being established using a trust, there are two options:

(1) the trust, being a separate entity for tax purposes, can apply for DGR endorsement in itsown right in which case the trust will need its own ABN; or

(2) the corporate trustee of the school building trust can be endorsed as a DGR for thepurpose of operating the school building fund.

If the trust itself is to be endorsed as a DGR in its own right, it will also need to be, or become,income tax exempt in its own right (see [5.1.401] – [5.1.407]). In these circumstances, theschool building trust cannot benefit from or rely on the income tax exempt status of the trustee.So, looking at this from another angle, an entity that is not and cannot be exempt from payingincome tax wishing to establish a school building fund would likely choose to establish such afund under a trust structure and seek income tax exemption for the trust.

In circumstances where the trustee of the school building trust is endorsed as a DGR for thepurpose of operating the school building fund:

• the trustee will, unless it also has whole of organisation DGR endorsement (see [5.1.701]– [5.1.703]), need to ensure that a gift fund is established and maintained (see[5.1.1101]); and

• the trust itself will not need to be endorsed as income tax exempt so long as the trusteeis exempt.

Alternatively an entity may establish a school building fund by a resolution of the board and anacceptance of certain guidelines to be contained in a set of standalone governing rules. In thesecircumstances, the school building fund relies on the income tax exempt status of the entityestablishing the fund.

[5.1.804] Governing rules

To be endorsed by the ATO, the founding documents of a school building fund (eg a trust deedor a set of standalone governing rules) must address particular elements. The provisions of thefounding documents must demonstrate that the fund will be operated and wound up inaccordance with certain requirements and cover:

• the establishment of the school building fund;

• the establishment and constitution of the committee to govern the fund;

• the purpose for which the fund is established and operated;

• the way in which the fund is to be administered;

• the way the funds are to be used and invested;

• how the funds are to be tracked and accounted for; and

• what happens to surplus assets if the fund is wound up.

[5.1.805] Qualifying bodies

The following information is taken from Draft Taxation Ruling TR 2011/D5, in particularparas 33 to 35 and 168 to 175:

• for the purposes of a school building fund, the use of a building as a school must be bya government, by a public authority or by a not-for-profit society or association, togetherreferred to as “qualifying bodies”;



• the use of a building as a school by a government or a public authority requiresidentification of the government or the public authority as the user of the building as aschool;

• the use of a building as a school by a not-for-profit society or association is determinedby reference to its constituent and governing documentation and to its actual activitiesand operations; and

• because multiple trustees do not constitute a society or association, a school that isconducted by several trustees is not, by that fact alone, conducted by a society orassociation. However, where trustees conducting a school act for and according to thepurposes of a society or association, that society or association may be regarded asconducting the school through the trustees. In these circumstances, the society orassociation can be regarded as using as a school a building the trustees use as the school.

[5.1.806] What can a school building fund pay for? General information

When considering what a school building fund can pay for, the GiftPack, School Building FactSheet and Draft Taxation Ruling TR 2011/D5 give the following guidance:

• a school building fund must be used for providing money for acquiring, constructing ormaintaining school or college buildings only and not for any other purpose;

• generally speaking, disbursements related to acquiring, constructing or maintaining abuilding used as a school are disbursements that are related to obtaining the use of abuilding for the purpose of using it as a school; keeping the building fit for that purpose;and fund administration costs;

• expenditure on capital improvements and maintenance, as well as installing andmaintaining fixtures, are accepted outlays of a school building fund;

• examples of land-related costs that can be payable from a school building fund includepurchase of land for which there are definite plans to construct a building to be used as aschool or college, construction or purchase expenses and associated financing costs andlease payments on a rented school building;

• other costs that may be met by a school building fund include general maintenance ofschool buildings, building insurance, expenditure on carpets that are fixed to the floor ofthe school building; and

• administration costs of the fund, including bank fees, accounting costs and fundraisingexpenses can also be met from the funds of a school building fund;

• costs that cannot be paid by a school building fund include running expenses of theschool, paying teachers, buying furniture and materials and maintaining sports groundsand car parks; and

• a school building fund may invest or lend its money if it is a bona fide and temporaryarrangement and is consistent with achieving the fund’s objects with all reasonablespeed.

[5.1.807] What can a school building fund pay for? More detail

Details are provided in Draft Taxation Ruling TR 2011/D5.

Acquisition of buildings and land

Costs associated with the acquisition of a school building that can be met by a school buildingfund include:

• costs incurred in negotiating, completing and financing the purchase of a building to beused as a school;



• repayment of the capital of, and interest charges on, a loan incurred in the purchase ofthe building;

• cost of land that is directly required for the construction of a building to be used as aschool, but only if the entity purchasing the land is, at the time of acquisition of the land,committed to commencing construction within a reasonable period. What is “reasonable”depends on the circumstances. Significant delay or uncertainty may lead to theconclusion that the land is not acquired as part of the acquisition or construction of abuilding used as a school; and

• site preparation costs (eg the cost of demolition of an old building on the proposedbuilding site and excavation costs).

A building need not be owned to be acquired in the context of a school building fund. Theconcept of “acquisition” is not limited only to purchase of a building. It can extend to buildingsthat are rented or leased by the organisation conducting the school and are used as a schoolwhile rented or leased. Rent or lease payments facilitate the use of the buildings as a school inthe same way as payments to finance outright purchase.

With the above in mind, rent or lease payments will be acceptable expenditure as a purpose ofthe fund:

• where they are no more than the fair rent for the period over which the building is foruse as a school; and

• where the arrangements do not provide any benefit in relation to any other use of thebuilding.

The requirement that the fund provides money solely for the acquisition, construction ormaintenance of the building will not be met where the rent or lease payments are part ofarrangements that provide for use of the land or buildings other than as a school (unless thatother use is integral to use as a school or no more than minor or occasional). Similarly,construction costs must not provide for use of the building other than as a school (unless thatother use is integral to use as a school or no more than minor or occasional).

Money from a school building fund must not be used to purchase land for any purpose otherthan as the site of a building used as the school unless such other land is incidental to the site.For example, money from a school building fund cannot be used to purchase land for thepurpose of providing recreational space (such as sports grounds) since these do not involve abuilding.

As the development of a school may require or be conditional on the availability of land forother purposes as well as land that is the site of a building used as a school, a gift deductibleschool building fund will rarely be able to purchase all land required for the purposes of aschool development.

Maintenance costs

For the purposes of a school building fund, the word “maintenance” takes its ordinarymeaning, being keeping the building in proper or good condition.

To be an acceptable maintenance disbursement from a school building fund, the disbursementmust be readily perceived as relating to the maintenance of the school building.

Costs associated with maintenance of a school building that can be met by a school buildingfund include:

• the cost of cleaning the building, including its floor coverings and windows;

• janitors’ and cleaners’ salaries and wages to the extent they directly relate to maintainingthe building in good condition;



• insurance premiums for the building (but not premiums relating to the contents of thebuilding);

• the purchase of equipment used exclusively for maintaining the school building (eg avacuum cleaner); and

• repairs, painting and plumbing upkeep on the building.

The maintenance of a school building does not include:

• the maintenance of sports equipment, playgrounds, sports fields, landscaping or carparks, as these are not school buildings;

• general operating costs of a school, such as water, gas, electricity, sewerage and contentsinsurance;

• teaching staff salaries; and

• the general upkeep costs of furnishings.

Where costs relate, in part, to the maintenance of the building used as a school, an appropriatepart of those costs is an acceptable disbursement against the school building fund. Forexample, if a cleaner’s time is devoted 50% to maintaining the building used as a school, withthe balance of his or her time devoted to other work such as building security, 50% of thecleaner’s salary costs would be a legitimate charge against the fund for maintenance of thebuilding used as a school. The purpose of the fund may extend to meeting that part of the costthat is a cost of maintaining the school building.

Maintenance of a building on leased land is also acceptable expenditure unless that expenditureis directed not only to maintenance arising while the building is used as a school but tomaintenance in other periods as well.

Security costs

School building funds can be used to meet the costs of installing and maintaining securityalarms and lighting, and window and door security such as grilles, provided the items are partof, or a fixture to, the building that is used as a school.

However, expenditure on non-fixture items such as security guards, guard dogs, mobilecommunications and similar equipment are not acceptable disbursements, as it is not on theacquisition, construction or maintenance of a school building.

Fund administration

Administration costs that are an acceptable charge against a school building fund are limited tocosts paid in an arm’s length transaction specifically and solely to establish or maintain thefund (and for no other purpose). These include:

• direct costs of establishing or promoting the fund, such as advertising costs;

• direct costs of operating the fund, such as bank charges, stationery costs, accounting andaudit fees and other professional services relating specifically to the fund;

• fees paid for professional direction of a planned giving or fundraising programspecifically for the fund; and

• the remuneration of a fund administrator specifically to administer the fund so long asthe fund is operated solely for the required purpose and the remuneration is no more thanthe amount that would be paid to a third party in an arm’s length transaction specificallyto establish or maintain such a fund.



WarningIn a combined fundraising appeal (or multiple purpose appeal), the school buildingfund can only bear the part of the fees for its share of the total amount raised in theappeal and for no other purpose.

Fund administration costs that are not acceptable and must not be disbursed from aschool building fund include general administration costs that the school would incurregardless of the existence or otherwise of the fund.

Excessive fund administration costs can indicate that the sole purpose of the fund isnot to acquire, construct or maintain a school building.

Investments by school building funds

A school building fund may invest or lend its funds if the fund’s controllers are able toestablish that:

• they are proceeding with all reasonable speed to achieve the fund’s objects;

• the investments or loans from the fund represent a bona fide and temporary arrangementthat is in the best interests of the fund; and

• the investment or loan will assist the fund achieve its objects within a reasonable period.

In these circumstances, investment or lending of funds may be shown to be no more thanincidental to, and so a part of, the sole purpose of the fund. This will be a question of fact inthe circumstances of each case.

[5.1.808] Meaning of “established and maintained solely”

A school building fund’s sole purpose or object, its sole reason for establishment, must be toacquire, construct or maintain a building that is (or is to be) used as a school by a qualifyingbody.

TIP +Just because a school building fund’s sole purpose must be to do with school buildings

doesn’t mean that the building or buildings themselves must be used solely as a school

building. However, any other use of the building must be either integral to its use as a

school or be only minor or occasional (other use). Whether other use is integral or is only

minor or occasional is a question of fact.

Draft Taxation Ruling TR 2011/D5 provides the following examples:

• If a building is only used as a school for short periods of time (eg 1 day in the week) butis not used at all for any other purpose at other times, its use may still be as a school.

• Where a building is specially adapted for a necessary but infrequent use as a school, andkept for that use only, any fund to acquire, construct or maintain it has the sole purposeof acquiring, constructing or maintaining a building used as a school.

[5.1.809] What is a school or college?

When assessing whether there is a school or college, the GiftPack, School Building Fact Sheetand Taxation Ruling TR 2011/D5 give the following guidance:

• as the ITAA97 does not define the words “school” and “college” their ordinary meaningsapply;



• for the purposes of a school building fund, a “school or college” is an institution that hasas its primary function or essential purpose providing regular, ongoing and systematicinstruction in a course of training, generally in class form. It must be a place of education– imparting knowledge and training the minds of those who attend;

• organised instruction or training includes people assembling for regular study of somearea of knowledge or activity and extends to religious as well as secular instruction;

• organised instruction or training does not include recreation unless it is no more thanincidental to the main instruction;

• a “school or college” must be an institution, and so have a real, separate, institutionalexistence, even if this existence is within or as part of another institution, school orcollege;

• the instruction or training provided by a school or college would generally be given byqualified persons, in accordance with a set curriculum and with some form of assessmentand correction; a school or college is likely to provide instruction or training towards aqualification or result that is recognised more widely than just by the institution itself;

• bodies that have been accepted as schools or colleges include Sunday schools, adultreligious education centres, bible study centres and pre-school kindergartens that are notprimarily for child minding; and

• bodies that are not schools or colleges include child-care centres, yoga schools, ridingschools, woodturning centres, dressmaking, ceramics and cookery workshops where theprimary activity is associated with recreational pursuits.

[5.1.810] What is a building?

When considering what is a building, the GiftPack, School Building Fact Sheet and TaxationRuling TR 2011/D5 give the following guidance:

• the word “building”: is not defined in the ITAA97 and so its ordinary meaning is toapply;

• the term “building” includes one building, a group of buildings, a part of a building oradditions to a building;

• a building is a permanent structure, usually with walls, a roof and flooring, that providesprotection from the elements for students, teachers, relevant equipment and services theschool provides and uses in its operation;

• an example of a structure without walls that would still be considered a building is acovered outdoor learning area made of galvanised steel with colour bond roofing,guttering and downpipes that is fixed to the land by posts embedded in a concrete floor.A structure of this type is a building for the purposes of a school building fund becauseit is in the nature of a building: it is a structure with the function of a building used as aschool, it is fixed to the ground, it has a roof and its size and method of constructionindicate that it is not intended to be in place on an interim or short-term basis or for atemporary purpose;

• items that are not buildings include tennis courts, playing fields, covered play areas, carparks and landscaping. This is because these structures/items do not form an enclosureand do not provide protection from the elements;

• fixtures, being things that are affixed to a building and are unable to be detached withoutsubstantial damage to the item itself or that to which it is attached, are accepted as part ofa building and can therefore be funded by a school building fund;

• fixtures include items such as ducted heating systems, fixed air conditioning systems andfixed carpets; and



• fixtures do not generally include items such as furniture, training equipment andcomputers.

[5.1.811] What is use as a school?

When considering whether a building is being used as a school, the GiftPack, School BuildingFact Sheet and Taxation Ruling TR 2011/D5 give the following guidance:

• the building (or group of buildings) must be used for a purpose that is connected with thecurriculum of the school or college;

• the building (or group of buildings) must be used as the school and not just a place usedfor the purposes of the school or that is beneficial to the school. For example, a localScout hall that is hired by a nearby school for a few hours every weekday for art classesis not a building whose use is controlled by the school; and

• a building which, if looked at in isolation, would not be considered to be a building usedas a school because it is not specifically used for regular and systematic instruction canstill be accepted as a building used as a school if it forms an integral part of the operationof the school and it is used for school purposes;

[5.1.812] Other use that is “integral to” use as a school

Draft Taxation Ruling TR 2011/D5 provides the following guidance:

• other use of a building is integral to its use as a school if it is for activities that are partof or naturally go with the operation of the school. Activities that are part of or naturallygo with the operation of a school are decided on a case by case basis in light of all thefacts and circumstances of the operation of the particular school;

• in certain circumstances, a building can still form an integral part of the operation of aschool even if it is used for activities that are not in themselves instructional so long as itis part of, or naturally goes with, the operation of the school. For example, a schoolchapel in a denominational school, a school’s administration office in the school, theresidential accommodation of a boarding school or an assembly hall of the school; and

• a building used as a school can also include an element which, if it were a separatebuilding or part of a building acquired, constructed or maintained on its own account,would not be accepted as being a building that is used as a school. For example,inclusion of a garage for staff cars as an integral part, both in terms of its use and itsarchitecture, of a new school building would be accepted as a building being used as aschool. However, a fund established solely to build a garage for staff cars, even if it islocated on school grounds, would not qualify, as the building is not being used as aschool.

Examples

Example 1: A stand alone toilet block adjacent to a building containing severalclassrooms for use by students, teachers and visitors to the school forms an integralpart of the operation of the school despite not being used for instruction. As such itis a school building being used as a school and acquiring, constructing ormaintaining the stand alone toilet block can be included in the purposes of a giftdeductible school building fund.

Example 2: A school tuck-shop facility is operated during school time for studentsand teachers. Orders are taken by the tuck-shop and delivered during school timeto support and not conflict with school activities. The tuck-shop, considered inisolation, is not used as a school, but it forms an integral part of the operation of



the school and is used for school purposes. Acquiring, constructing or maintainingthe tuck-shop can be included in the purposes of a gift deductible school buildingfund.

[5.1.813] Other use that is “minor or occasional”

Draft Taxation Ruling TR 2011/D5 provides the following guidance:

for the purpose of a school building fund, other use of a building is “minor or occasional”if its use other than as a school by the qualifying body or some other entity is minor inquantitative terms (even if regular) or only occurs from time to time. This other use can beby either the qualifying body or by some other entity;

Any “minor or occasional” use other than as a school must not:

• materially limit or affect the use of the building as a school;

• materially affect the cost of acquiring, constructing or maintaining the building; or

• otherwise be a material purpose of the fund.

As a simple example, a fund may be established for a building to be used as a school where, attimes when the building will not be used as a school, the building will be used as a pollingcentre in elections.

Where a building has been purposely adapted to allow use other than as a school, and theadaptation is materially inconsistent with or beyond what is required for its use as a school,that other use will not be “minor or occasional”.

Examples

Example 1: A school hires out some of its classrooms for one morning everyweekend to a local community group that conducts a yoga class. Existing furnitureis rearranged and any additional equipment required is brought in by thecommunity group. Whilst this use is not use as a school, it is minor or occasional(though regular) and does not affect use of the building as a school building. Assuch, it does not affect the characterisation of the building as a building used as aschool, so acquiring, constructing or maintaining the classrooms can be included inthe purposes of a gift deductible school building fund.

Example 2: A school committee has decided to allow use of its newly constructedschool hall outside of school hours to generate additional funds. A Rotary Clubmeeting is held at the facility once a week on a weekday evening. Two or threetimes in the year, this will need to be changed to another night or venue when aschool function requires use of the facilities. In addition, a local repertory groupwill produce plays to be performed at the facility four times a year, with sessionseach evening for a period of 2 to 3 weeks each time. A local ladies fitness groupwill also use the facility one evening each fortnight. Although these uses are notuse as a school, they are minor or occasional (even if considered collectively) anddo not affect the characterisation of the building as a building used as a school.Acquiring, constructing or maintaining the hall can be included in the purposes ofa gift deductible school building fund.

See especially, paras 27 to 29, 69 and 70 of Draft Taxation Ruling TR 2011/D5.



[5.1.814] Multi-purpose buildings and complexes

When considering if, and to what extent, a multi-purpose building can be funded by a schoolbuilding fund, the GiftPack, School Building Fact Sheet and Draft Taxation Ruling TR2011/D5 give the following guidance:

• a building (or a part of a building) in a multi-purpose complex must satisfy the samerequirements as any other building before it can be characterised as a building used as aschool (see [5.1.810]);

• where use of an area, such as a common area in a multi-purpose complex, is shared by aschool with others, the school building fund can only use its funds to contribute towardsthe cost of that common area if it is used as a school, ie where any other use is eitherintegral to its use as a school, or is only minor or occasional; and

• a donation directly to a school building fund for a building (or part of a building) whichis used as a school even though it is also part of a multi-purpose complex is taxdeductible. However the school building fund must not be for the acquisition,construction or maintenance of any part of the multi-purpose complex that is not used asa school.

[5.1.815] Multi-purpose fundraising appeals

Draft Taxation Ruling TR 2011/D5 gives the following guidance:

• a donation to a gift deductible school building fund can only be deductible if thedonation is established by the donor at or before the time the gift to the school buildingfund is made;

• if a donation to a school fundraising appeal is partly for a school building fund and partlyfor other purposes, the part that is intended as a gift to the school building fund will onlybe tax deductible if the donor establishes how the donation is to be allocated at or beforethe time the donation to the appeal is made;

• there are various ways in which a donor can establish that part of their wider donation isa deductible gift to a school building fund. For example:

– where an organisation raises funds by using a form by which a donor allocates hisor her gift – for example, a pledge form by which amounts are given to differentpurposes including the school building fund – the donor can indicate on that formthe proportion or amount of his or her gift which is given to the school buildingfund. It is that part of the gift which is given to the gift deductible school buildingfund; or

– the terms of the fundraising appeal, usually recorded beforehand in a printedbrochure, may state the proportion (or perhaps an amount) of each contribution tothe appeal which will be given to the school building fund. When a contribution ismade on the basis of those terms, the amount or proportion specified in the termsof the appeal as being for the school building fund will be accepted as the amountgiven by the donor to the school building fund;

• a donation will not be tax deductible if an entity other than the donor determines theamount that is to be allocated to the school building fund and the donor does not approveor direct the allocation by or at the time the gift is made; for example, a donor who giftsa single amount to multiple funds cannot claim a tax deduction if the fundraisers are theones who decide, after the time the gift is given, the amount or proportion to be allocatedto the school building fund; and

• gifts to or for the general fund or funds of a school are not deductible, even if the sumgiven is subsequently applied towards the cost of construction, acquisition or



maintenance of a school building; similarly, gifts to the funds of a Parents and CitizensAssociation (or a similar organisation) are not deductible as a gift to a gift deductibleschool building fund, again even if they are subsequently applied towards the cost ofconstruction or maintenance of a school building.

See especially, paras 36 to 38 and 176 to 179 of Draft Taxation Ruling TR 2011/D5.

[5.1.816] Fund administration


• where the relevant endorsed entity is not the gift deductible school building fund itself, itmust maintain a separate gift fund for donations and contributions to the school buildingfund (see [5.1.1101]);

• all donations to the school building fund must go into the fund. The fund may alsoinclude other amounts (such as income from interest on amounts in the fund, or earningsfrom minor or occasional use of the building other than as a school); and

• other money received in relation to a school – eg government grants, school fees andother donations – must be kept separate from the school building fund.

[5.1.817] Ancillary funds


A school wanting to raise money for a range of purposes that would individually satisfydeductible gift requirements can establish an ancillary fund, gifts to which are deductible. Forexample, money raised by an ancillary fund can be subsequently provided to a school buildingfund, a scholarship fund, a public library fund etc, without the need for the original gifts tohave been made partly to one and partly to the other purpose. See para 183 of the DraftTaxation Ruling TR 2011/D5 for a diagram illustrating the operation of an ancillary fund in theschool building context.

For more on public ancillary funds, see [5.1.953] and Taxation Ruling TR 95/27.



u0080542

STATE AND TERRITORY TAXATION, DUTIES ANDIMPOSTS

State and Territory taxation, duties and imposts

IntroductionGeneral information ................................................................................. [5.2.101]Stamp duty ............................................................................................. [5.2.102]Payroll tax .............................................................................................. [5.2.103]Land tax ................................................................................................. [5.2.104]

New South WalesTax and duty concessions for charities and not-for-profit organisations in

New South Wales ............................................................................... [5.2.201]

QueenslandTax and duty concessions for charities and not-for-profit organisations in

Queensland........................................................................................ [5.2.301]

South AustraliaTax and duty concessions for charities and not-for-profit organisations in

South Australia ................................................................................... [5.2.401]

TasmaniaTax and duty concessions for charities and not-for-profit organisations in

Tasmania ........................................................................................... [5.2.501]

VictoriaTax and duty concessions for charities and not-for-profit organisations in

Victoria .............................................................................................. [5.2.601]

Western AustraliaTax and duty concessions for charities and not-for-profit organisations in

Western Australia................................................................................ [5.2.701]What is payroll tax?................................................................................. [5.2.702]What is the Metropolitan Region Improvement Tax..................................... [5.2.703]Land tax ................................................................................................. [5.2.704]Western Australian Local Government rates and service charges ................ [5.2.705]

Australian Capital TerritoryTax and duty concessions for charities and not-for-profit organisations in

the Australian Capital Territory.............................................................. [5.2.801]

Northern TerritoryTax and duty concessions for charities and not-for-profit organisations in

the Northern Territory .......................................................................... [5.2.901]

[The next text page is 502-1051]


TAXATIONSTATE AND TERRITORY TAXATION, DUTIES AND IMPOSTS


STATE AND TERRITORY TAXATION, DUTIES AND IMPOSTS

Introduction

[5.2.101] General information

This chapter explores the various taxes, duties and other imposts required or levied by stateand territory and local governments and what concessions are available, if any, whichorganisations can access the concessions and how to apply for them.

This part provides a brief introduction to the types of taxes and duties covered. The remainderof the chapter is then broken down into each state and territory.

Taxes and duties that may be levied by state and territory governments include:

• stamp duty (also called “duty”);

• payroll tax; and

• land tax (which may also require an emergency services levy and/or a particular taxrelating to land improvement).

These taxes are administered by the “revenue office” for each state and territory as follows:

• New South Wales – Office of State Revenue NSW

• South Australia – RevenueSA

• Queensland – Office of State Revenue

• Tasmania – State Revenue Office

• Victoria – State Revenue Office Victoria

• Western Australia – Office of State Revenue

• Australian Capital Territory – ACT Revenue Office;

• Northern Territory – Territory Revenue Office

In addition, many local governments also impose rates and other fees in connection with theservices and facilities each provide. For example, council rates, water rates and servicescharges.

The tax and duty summaries below have been taken from the ATO publication entitled TaxBasics for Non-profit Organisations (NAT 7966).

[5.2.102] Stamp duty

Stamp duty is a tax on:

• written documents (often referred to as “instruments”) – for example motor vehicleregistrations and transfers, insurance policies, leases, mortgages, hire purchaseagreements and transfers of property; and

• certain transactions – for example, sale of businesses, real estate and certain shares.

The rate of stamp duty varies according to the type and value of the transaction involved.

Depending on the nature of the transaction, certain concessions and exemptions may beavailable in each state as:

• New South Wales (NSW) does not levy duty on leases, home loans to natural personsand the hire of goods;

STATE AND TERRITORY TAXATION, DUTIES AND IMPOSTSINTRODUCTION[5.2.102]


• Queensland does not levy duty on leases, marketable securities, credit card and creditbusiness transactions, and the hire of goods;

• South Australia does not levy stamp duty on mortgages, leases, listed securities and thehire of goods;

• Tasmania does not levy duty on unlisted securities, leases and the hire of goods;

• Victoria does not levy duty on unlisted securities, certain leases and mortgages;

• Western Australia does not levy duty on marketable securities and leases;

• the Australian Capital Territory (ACT) does not levy duty on mortgages, hiring duty,leases and marketable securities; and

• the Northern Territory does not levy stamp duty on mortgages, marketable securities andthe grant and renewal of a lease.

[5.2.103] Payroll tax

Payroll tax is a tax on the wages paid by employers. Employers are liable for payroll tax whentheir total Australian wages exceed a certain level called the “exemption threshold”. Exemptionthresholds vary between states and territories.

Payroll tax should not be confused with the pay-as-you-go (PAYG) withholding system.Payroll tax is payable to the relevant state or territory by an employer based on the total wagespaid to all employees. Wages include salary, allowances, superannuation contributions, fringebenefits, shares and options and certain contractor payments. Certain organisations may beexempt from payroll tax provided that specific conditions are satisfied.

[5.2.104] Land tax

Land tax is imposed in all states and the ACT but not in the Northern Territory. It is a taxgenerally levied on landowners.

Landowners are generally liable for land tax when the unimproved value of taxable landexceeds certain thresholds – except in the ACT. In some states there are deductions and rebatesavailable, depending on the use of the land. Principal places of residence are usually exemptfrom land tax, although this is subject to certain qualifying criteria which vary betweenjurisdictions.

Land owned and used by certain organisations may be exempt from land tax, such asnon-profit societies, clubs and associations, religious institutions, public benevolent institutionsand charitable institutions.

TAXATIONSTATE AND TERRITORY TAXATION, DUTIES AND IMPOSTS [5.2.102]



Western Australia

[5.2.701] Tax and duty concessions for charities and not-for-profitorganisations in Western Australia

STATE AND TERRITORY TAXATION, DUTIES AND IMPOSTSWESTERN AUSTRALIA[5.2.701]

[Please see over page for table]


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[5.2.701]TAXATION



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[5.2.701]TAXATION



Du

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sed

sole

lyfo

rth

ep

urp

ose

sfo

rw

hic

hth

ein

stit

uti

on

was

esta

bli

shed

.F

urt

her

:

•in

com

eg

ener

ated

mu

stb

eu

sed

sole

lyfo

rch

arit

able

pu

rpo

ses;

and

•th

ech

arit

ym

ust

be

pro

hib

ited

fro

md

istr

ibu

tin

git

sas

sets

toit

sm

emb

ers

(in

clu

din

go

nw

ind

ing

-up

)b

ut

may

dis

trib

ute

its

asse

tsto

ano

ther

char

itab

leo

rb

enev

ole

nt

inst

itu

tio

nw

ith

sim

ilar

o

bje

cts.

13

Wh

ere

la

nd

is

h

eld

b

y

a

pu

bli

c

ch

ari

tab

le

or

b

en

ev

ole

nt

inst

itu

tio

n

bu

t n

ot

use

d

sole

ly

for

the

pu

rpo

ses

for

wh

ich

th

e

inst

itu

tio

n

was

est

ab

lish

ed

, th

e

pu

bli

c

ch

ari

tab

le

or

b

en

ev

ole

nt

inst

itu

tio

n

wil

l b

e

en

titl

ed

to

an

ex

em

pti

on

fr

om

la

nd

ta

x

on

th

e

pro

po

rtio

n

o

f th

e

lan

d

that

is

bein

g

use

d

for

the

pu

rpo

ses

for

wh

ich

th

e

inst

itu

tio

n

was

esta

bli

shed

.14

La

nd

Tax

Ass

essm

ent

Act

20

02

(WA

)s

37

(fu

llex

emp

tio

n),

s1

8(p

art

exem

pti

on

)

Ap

pli

cati

on

for

Ex

emp

tio

nP

ub

lic

Ch

arit

able

or

Ben

evo

len

tIn

stit

uti

on

s15

Ala

nd

ow

ner

mu

stap

ply

for

anex

emp

tio

no

rco

nce

ssio

nu

sin

gth

efo

rmsp

ecifi

edb

yth

eD

epar

tmen

to

fF

inan

ce1

6

and

by

lod

gin

gth

atfo

rmw

ith

the

Co

mm

issi

on

-er

.17

Th

efo

rmm

ust

be

acco

mp

anie

db

yan

yad

dit

ion

alin

form

atio

nsp

ecifi

edin

the

Co

mm

issi

on

er’s

Pra

ctic

e(e

ga

cop

yo

fth

ela

nd

ow

ner

’sco

nst

itu

tio

nis

req

uir

edw

hen

app

lyin

gfo

ran

exem

pti

on

or

con

cess

ion

un

der

LT

AA

s3

7).

18

Th

eC

om

mis

-si

on

erm

ayw

ish

toin

spec

tth

ere

lev

ant

pro

per

tyin

ord

erto

det

erm

ine

elig

ibil

ity

for

any

exem

pti

on

.19



Du

ty/t

ax

Co

nce

ssio

na

va

ila

ble

Eli

gib

ilit

ycr

iter

iaL

aw

Fo

rmP

roce

ss

Wes

tern

Au

stra

lia

–S

tate

Go

ver

nm

ent

tax

es

La

nd

Ta

x(c

on

tin

-u

ed)

Fu

llex

emp

tio

no

r5

0%

con

cess

ion

•T

he

lan

dm

ust

be

ow

ned

by,

ves

ted

ino

rh

eld

on

tru

stfo

ra

spo

rts

asso

ciat

ion

or

any

oth

ern

on

-pro

fit

asso

ciat

ion

(NPA

).

•T

he

lan

dm

ust

be

use

das

asi

tefo

rp

rov

idin

gfa

cili

ties

that

are

nec

essa

ryfo

ro

rco

nd

uct

ive

toth

eat

tain

men

to

fth

eo

bje

ctiv

eso

fth

en

on

-pro

fit

asso

ciat

ion

.

•F

or

no

n-s

po

rtin

gN

PAs,

the

faci

liti

eso

nth

ela

nd

mu

sto

nly

be

avai

lab

leto

mem

ber

san

dth

eir

gu

ests

.

•In

com

eg

ener

ated

mu

stb

eu

sed

sole

lyfo

rN

PAp

urp

ose

s.2

0

•T

he

NPA

mu

stb

ep

roh

ibit

edfr

om

dis

trib

uti

ng

its

asse

tsto

its

mem

ber

s(i

ncl

ud

ing

on

win

din

g-u

p).

21

La

nd

Tax

Ass

essm

ent

Act

20

02

(WA

)s

38

Ap

pli

cati

on

for

Ex

emp

tio

no

rC

on

cess

ion

No

n-P

rofi

tO

rgan

isat

ion

s22

Ala

nd

ow

ner

mu

stap

ply

for

anex

emp

tio

no

rco

nce

ssio

nu

sin

gth

efo

rmsp

ecifi

edb

yth

eD

epar

tmen

to

fF

inan

ce2

3

and

by

lod

gin

gth

atfo

rmw

ith

the

Co

mm

issi

on

-er

.24

Lan

dh

eld

by

anN

PAb

ut

no

tu

sed

sole

lyfo

ra

no

n-p

rofi

tp

urp

ose

may

be

elig

ible

for

a5

0%

con

cess

ion

on

lan

dta

xp

rov

ided

that

the

no

n-p

rofi

tu

sag

eis

50

%o

rg

reat

er.2

5

Th

efo

rmm

ust

be

acco

mp

anie

db

yan

yad

dit

ion

alin

form

atio

nsp

ecifi

edin

the

Co

mm

issi

on

er’s

Pra

ctic

e(e

ga

cop

yo

fth

ela

nd

ow

ner

’sco

nst

itu

tio

nis

req

uir

edw

hen

app

lyin

gfo

ran

exem

pti

on

or

con

cess

ion

un

der

s3

8).

26

Th

eC

om

mis

sio

ner

may

wis

hto

insp

ect

the

rele

van

tp

rop

erty

ino

rder

tod

eter

min

eel

igib

ilit

yfo

ran

yex

emp

tio

no

rco

nce

ssio

n.2

7

[5.2.701]TAXATION



Du

ty/t

ax

Co

nce

ssio

na

va

ila

ble

Eli

gib

ilit

ycr

iter

iaL

aw

Fo

rmP

roce

ss

Wes

tern

Au

stra

lia

–S

tate

Go

ver

nm

ent

tax

es

Defi

nit

ion

Fo

rth

ep

urp

ose

so

fs

38

of

the

LT

AA

,a

“no

n-p

rofi

tas

soci

atio

n”

(NPA

)is

defi

ned

inth

eG

loss

ary

toth

eL

TA

Aas

“aso

ciet

y,cl

ub

or

asso

ciat

ion

that

isn

ot

carr

ied

on

for

the

pu

rpo

seo

fp

rofi

to

rg

ain

toit

sin

div

idu

alm

emb

ers

…”

Met

rop

oli

tan

Reg

ion

Imp

rov

e-m

ent

Ta

x(M

RIT

)28

Pu

rsu

ant

tos

20

0(4

)o

fth

eP

DA

,th

eL

TA

Aap

pli

esto

the

MR

ITas

far

asit

can

be

app

lica

ble

.

On

the

bas

isth

atth

eL

TA

Aap

pli

esto

the

MR

ITas

far

asca

nb

eap

pli

cab

le,

ss3

7an

d3

8o

fth

eL

TA

Am

ayap

ply

tore

du

ceo

rex

emp

tth

eM

RIT

pay

able

by

a“p

ub

lic

char

itab

leo

rb

enev

ole

nt

inst

itu

tio

n”

or

a“n

on

-pro

fit

asso

cia-

tio

n”.

29

See

the

com

men

tary

on

lan

dta

x,

abo

ve,

reg

ard

ing

the

spec

ific

crit

eria

for

ob

tain

ing

exem

pti

on

su

nd

erss

37

and

38

of

the

LT

AA

.

Pla

nn

ing

an

dD

evel

op

men

tA

ct2

00

5(W

A)

(PD

A),

Met

rop

oli

tan

Reg

ion

Imp

rove

men

tTa

xA

ct1

95

9(W

A)

(MR

ITA

),L

an

dTa

xA

sses

smen

tA

ct2

00

2(W

A)

(LT

AA

)an

dth

eTa

xati

on

Ad

min

istr

ati

on

Act

20

03

(WA

)(T

AA

)(t

og

eth

erth

eA

cts)

30

Th

ere

are

no

spec

ific

form

sp

rov

ided

by

the

Dep

artm

ent

of

Fin

ance

(Dep

artm

ent)

ino

rder

toap

ply

for

anex

emp

tio

no

rco

nce

ssio

nfr

om

MR

IT.

Th

eap

pli

cati

on

form

sfo

rla

nd

tax

may

be

rele

van

tif

anap

pli

can

tm

akes

itcl

ear

that

the

app

lica

tio

nis

for

anex

emp

tio

no

rco

nce

ssio

nfr

om

lan

dta

xan

dM

RIT

.A

lter

na-

tiv

ely,

anap

pli

cati

on

cou

ldb

em

ade

inw

riti

ng

toth

eD

epar

tmen

t.

Ref

erto

the

com

men

tary

on

lan

dta

x,

abo

ve,

for

info

rmat

ion

on

the

pro

cess

lik

ely

tob

eap

pli

cab

lein

ob

tain

ing

anex

emp

tio

no

rco

nce

ssio

nfr

om

MR

IT.

Itis

exp

ecte

dth

atth

eD

epar

tmen

tw

ill

hav

eth

esa

me

req

uir

emen

tsfo

ran

MR

ITex

emp

tio

no

rco

nce

ssio

nas

ala

nd

tax

exem

pti

on

or

con

cess

ion

on

the

bas

isth

atth

eL

TA

Ap

rov

ides

the

exem

pti

on

san

dco

nce

ssio

ns

fro

mth

eM

RIT

.31

Acc

ord

ing

ly,

ap

ub

lic

char

itab

leo

rb

enev

ole

nt

inst

itu

tio

no

ra

no

n-p

rofi

tas

soci

atio

nm

ayb

een

titl

edto

anex

emp

tio

no

rco

nce

ssio

nfr

om

MR

ITin

the

sam

esc

enar

ios

asth

eyw

ou

ldb

een

titl

edto

anex

emp

tio

no

rco

nce

ssio

nfr

om

lan

dta

x3

2(r

efer

toth

eco

mm

enta

ryo

nla

nd

tax

,ab

ov

e,re

gar

din

gth

ep

rov

isio

ns

un

der

the

LT

AA

wh

ich

may

pro

vid

ere

lief

).



Du

ty/t

ax

Co

nce

ssio

na

va

ila

ble

Eli

gib

ilit

ycr

iter

iaL

aw

Fo

rmP

roce

ss

Wes

tern

Au

stra

lia

–S

tate

Go

ver

nm

ent

tax

es

Em

erg

ency

serv

ices

lev

y(E

SL

)T

he

ES

Lis

pay

able

yea

rly

on

all

lan

din

an“E

SL

cate

go

ryar

ea”3

3an

dis

use

dto

cov

erth

eco

sto

ffi

rean

dem

erg

ency

serv

ices

.

Th

ere

are

no

spec

ific

exem

pti

on

so

rco

nce

ssio

ns

fro

mth

eE

SL

gra

nte

dto

char

itie

san

dn

ot-

for-

pro

fit

enti

ties

.

Fir

ea

nd

Em

erg

ency

Ser

vice

sA

uth

ori

tyo

fW

este

rnA

ust

rali

aA

ct1

99

8(W

A)

and

the

Em

erg

ency

Ser

vice

sL

evy

Act

20

02

(WA

)

No

ne

Reg

ula

tio

ns

may

pre

scri

be

lan

ds

wh

ich

are

exem

pt

or

par

tial

lyex

emp

tfr

om

the

lev

y3

4an

dd

iffe

ren

tra

tes

for

the

lev

ym

ayb

eu

sed

dep

end

ing

on

the

ES

Lca

teg

ory

area

or

the

pu

rpo

sefo

rw

hic

hth

ela

nd

isu

sed

.35

Th

eM

inis

ter

isal

soen

titl

edto

wai

ve

or

gra

nt

con

cess

ion

sin

rela

tio

nto

the

ES

L.3

6

Ex

emp

tio

ns

and

con

cess

ion

sm

ayb

eo

bta

inab

leu

nd

erre

gu

lati

on

so

rM

inis

teri

ald

eter

min

atio

ns

reg

ard

ing

the

rate

sim

po

sed

ho

wev

ern

on

ere

lev

ant

toch

arit

ies

and

no

t-fo

r-p

rofi

ten

titi

esco

uld

be

loca

ted

.

TAXATIONSTATE AND TERRITORY TAXATION, DUTIES AND IMPOSTS [5.2.701]


Du

ty/t

ax

Co

nce

ssio

na

va

ila

ble

Eli

gib

ilit

ycr

iter

iaL

aw

Fo

rmP

roce

ss

Wes

tern

Au

stra

lia

–S

tate

Go

ver

nm

ent

tax

es

Defi

nit

ion

Fo

rth

ep

urp

ose

so

fs

38

of

the

LT

AA

,a

“no

n-p

rofi

tas

soci

atio

n”

(NPA

)is

defi

ned

inth

eG

loss

ary

toth

eL

TA

Aas

“aso

ciet

y,cl

ub

or

asso

ciat

ion

that

isn

ot

carr

ied

on

for

the

pu

rpo

seo

fp

rofi

to

rg

ain

toit

sin

div

idu

alm

emb

ers

…”

Met

rop

oli

tan

Reg

ion

Imp

rov

e-m

ent

Ta

x(M

RIT

)28

Pu

rsu

ant

tos

20

0(4

)o

fth

eP

DA

,th

eL

TA

Aap

pli

esto

the

MR

ITas

far

asit

can

be

app

lica

ble

.

On

the

bas

isth

atth

eL

TA

Aap

pli

esto

the

MR

ITas

far

asca

nb

eap

pli

cab

le,

ss3

7an

d3

8o

fth

eL

TA

Am

ayap

ply

tore

du

ceo

rex

emp

tth

eM

RIT

pay

able

by

a“p

ub

lic

char

itab

leo

rb

enev

ole

nt

inst

itu

tio

n”

or

a“n

on

-pro

fit

asso

cia-

tio

n”.

29

See

the

com

men

tary

on

lan

dta

x,

abo

ve,

reg

ard

ing

the

spec

ific

crit

eria

for

ob

tain

ing

exem

pti

on

su

nd

erss

37

and

38

of

the

LT

AA

.

Pla

nn

ing

an

dD

evel

op

men

tA

ct2

00

5(W

A)

(PD

A),

Met

rop

oli

tan

Reg

ion

Imp

rove

men

tTa

xA

ct1

95

9(W

A)

(MR

ITA

),L

an

dTa

xA

sses

smen

tA

ct2

00

2(W

A)

(LT

AA

)an

dth

eTa

xati

on

Ad

min

istr

ati

on

Act

20

03

(WA

)(T

AA

)(t

og

eth

erth

eA

cts)

30

Th

ere

are

no

spec

ific

form

sp

rov

ided

by

the

Dep

artm

ent

of

Fin

ance

(Dep

artm

ent)

ino

rder

toap

ply

for

anex

emp

tio

no

rco

nce

ssio

nfr

om

MR

IT.

Th

eap

pli

cati

on

form

sfo

rla

nd

tax

may

be

rele

van

tif

anap

pli

can

tm

akes

itcl

ear

that

the

app

lica

tio

nis

for

anex

emp

tio

no

rco

nce

ssio

nfr

om

lan

dta

xan

dM

RIT

.A

lter

na-

tiv

ely,

anap

pli

cati

on

cou

ldb

em

ade

inw

riti

ng

toth

eD

epar

tmen

t.

Ref

erto

the

com

men

tary

on

lan

dta

x,

abo

ve,

for

info

rmat

ion

on

the

pro

cess

lik

ely

tob

eap

pli

cab

lein

ob

tain

ing

anex

emp

tio

no

rco

nce

ssio

nfr

om

MR

IT.

Itis

exp

ecte

dth

atth

eD

epar

tmen

tw

ill

hav

eth

esa

me

req

uir

emen

tsfo

ran

MR

ITex

emp

tio

no

rco

nce

ssio

nas

ala

nd

tax

exem

pti

on

or

con

cess

ion

on

the

bas

isth

atth

eL

TA

Ap

rov

ides

the

exem

pti

on

san

dco

nce

ssio

ns

fro

mth

eM

RIT

.31

Acc

ord

ing

ly,

ap

ub

lic

char

itab

leo

rb

enev

ole

nt

inst

itu

tio

no

ra

no

n-p

rofi

tas

soci

atio

nm

ayb

een

titl

edto

anex

emp

tio

no

rco

nce

ssio

nfr

om

MR

ITin

the

sam

esc

enar

ios

asth

eyw

ou

ldb

een

titl

edto

anex

emp

tio

no

rco

nce

ssio

nfr

om

lan

dta

x3

2(r

efer

toth

eco

mm

enta

ryo

nla

nd

tax

,ab

ov

e,re

gar

din

gth

ep

rov

isio

ns

un

der

the

LT

AA

wh

ich

may

pro

vid

ere

lief

).



TAXATIONSTATE AND TERRITORY TAXATION, DUTIES AND IMPOSTS

5.1 federal taxation - legal.thomsonreuters.com.au · (2) the governing rules (such as a...

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